MD Wong says company intends to increase the percentage of its commercial business.
My EG Services Bhd (MyEG) has brushed aside notion that the bulk of its business activities were dependent on the Government.
It said that commercial solutions and services now make up 70% of the group’s business activities, thus no longer rendering it just a concession for various e-government applications.
According to MyEG managing director Wong Thean Soon, better known as T.S. Wong (pic), the company intends to increase the percentage of its commercial business.
At the same time, MyEG feels it is ready to expand its operations beyond Malaysia.
“We believe we have accumulated a lot of experience and know-how, and we are now ready to export our solutions. Overseas expansion is an important area that we will focus on.
“On the domestic front, we are experimenting with vehicle leasing and online TV commerce and investing in a slew of start-ups,” said Wong.
Wong is the single largest shareholder of MyEG with a direct stake of 7.21%. He has an indirect stake of 31.95% via Asia Internet Holdings Sdn Bhd.
While MyEG’s primary business activities are the development and implementation of e-government services and the provision of solutions that are related to the e-government initiatives such as vehicle road tax and drivers’ licence renewal and foreign workers’ permit renewal, among others, it made an effort to diversify into commercial solutions three years ago.
The contribution to its commercial revenue consisted of solutions such as automobile insurance, foreign worker insurance, advanced credit and debit payment solutions, the sale of telecommunications services and the provision of hostel accommodations for foreign workers.
The new solutions appeared to be a downstream extension of what MyEG was providing.
Wong said that MyEG leveraged on the fact that it is a provider of government services to build a strong level of trust and credibility among its users.
“I enjoy starting and growing disruptive businesses or businesses that do things in a slightly different way. Obviously, trying to do things differently is never easy and many times we will encounter failure. However, each little success is satisfying, simply for the fact that it is achieved by doing things differently.”
MyEG is experimenting with many new products although some of them, according to Wong, may end in failure.
“But fear of failure has never stopped us from trying,” he said.
The company is coupling new enabling technologies with its dataset to the industries that it is expanding into.
“Many traditional industries continue to be disrupted by the ever evolving network effect of the Internet and by applying data analytics to these different sources of data, we are able to provide differentiated services,” he said.
He added that it was impossible to define the potential market size of MyEG because its scope of products and services were constantly expanding.
“We take a much wider perspective of the potential addressable market from the conventional view.
“We consider products and services that we can expand into, leveraging on our existing services as the potential addressable market. Hence, the market size is not easily defined,” he says.
MyEG has come a long way since it was listed on the local exchange’s Mesdaq Market (now Ace Market) in January 2007 at 55 sen a share and a market capitalisation of some RM69mil.
The stock was transferred to the Main Board two years later. Today, MyEG has a market capitalisation of RM5.87bil.
The stock’s popularity has increased over the last decade, with MyEG being seen as a darling stock because of its consistent upward trajectory.
The company piqued investor interest when it was initially seen as a partner of the Government because of its concessionaire status for Malaysia’s various e-government flagship applications.
Even an investor who has held on to the stock over the last five years, would be 15 times richer at its current price of RM1.63.
That’s not surprising, considering that over a five-year period, the stock has delivered a compounded annual growth rate of 45.1% on its profits and 36.8% on its revenue. Its shareholders equity has also grown by 32% over that period.
At this price, it is trading at a price earnings ratio of 37.91 times.
However, the stock is delivering above average returns.
For the financial year ended June 30, 2016, MyEG registered a net profit of RM142.52mil on a turnover of RM281.73mil, indicating a margin of about 50% on its business. For its 2016 earnings, some 70% of its revenue already comes from the commercial segment. Hence, the company is evolving and growing new businesses at a rapid rate.
According to Wong, MyEG is focused on absolute growth, even if margins are sacrificed.
An observer said: “There are difficult barriers to entry for government concessions. But even if MyEG’s concessions were to be opened to more players, it would be difficult for the new player to take MyEG’s businesses. People are already getting used to the convenience of doing it with MyEG.”
The observer added that even if new players took away the concession business, they cannot take away the commercial business.
“For the commercial business, there is no barriers to entry. MyEG is already demonstrating that it can compete in a free and capitalistic world,” said the observer.
On Feb 2, MyEG announced that its subsidiary, Hurr Tv Sdn Bhd, had incorporated a wholly-owned subsidiary known as MUCA Wellness Sdn Bhd. Its intended principal activity is electronic commerce.
Meanwhile, on the Government front, there continued to be a flurry of activity over the last two months.
On Jan 5, MyEG received a letter of acceptance from the Home Ministry in relation to the provision of online renewal of the temporary employment passes for foreign workers for the Immigration department.
The tenure of the project is five years from May 23, 2015 till May 22, 2020 with an estimated total value of RM553.85mil.
An agreement to formalise the acceptance of the project will be signed and announced by the company soon.
On Jan 23, MyEG also received a notification letter from the Home Ministry in relation to the extension of the management of illegal foreign workers for the rehiring programme.
The company will continue to undertake the project until Dec 31, 2017 instead of Aug 15, 2016 and will be able to register all foreign workers with the exception of foreign workers from Myanmar.
This project has no fixed value, as it is dependent on the number of illegal foreign workers being registered.
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Autor(en)/Author(s): Tee Lin Say
Quelle/Source: The Star Online, 13.02.2017
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